John Walker's Fourmilab Change Log

Thursday, February 19, 2009

Gnome-o-gram: The Indispensable Man

Admitting that there's something rather odd in appointing somebody to run the Treasury Department of the United States (which includes among its responsibilities the Internal Revenue Service), a person who failed to pay his own self-employment taxes while an employee of the International Monetary Fund (IMF) from 2001–2003, despite having claimed and received reimbursements for taxes owed during his employment there, the White House spin, echoed by the legacy media, was that the nominee, Timothy Geithner, was “indispensable” to sort out the present financial crisis.

Now how, precisely, is this fellow “indispensable”? Certainly not due to experience in the creation of wealth and jobs—not a single day of his career has been spent in the productive sector of the economy. But look at his career path, and what it may portend for the economic future of the United States during his term in office. What we notice is that, indeed very rare among other candidates for the post, he has had experience at the senior management level at the IMF and a key regional Federal Reserve Bank. As Secretary of the Treasury, he will be one of the three parties at the table should the unthinkable happen and a collapse of the credit rating of U.S. sovereign debt and/or the dollar force the United States into tutelage by the IMF, as has befallen many other profligate polities who tried to print their way out of insolvency.

This experience: IMF, Fed, and Treasury may indeed make Geithner an “indispensable man” for what is likely to befall the U.S. economy in the months to come, but it should give pause to anybody with assets denominated in dollars or linked in any way to U.S. financial markets.